Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Some of the matters discussed below include forward-looking statements within
the meaning of the federal securities laws. Forward-looking statements often use
words such as "may," "will," "believe," "expect," "estimate," "anticipate,"
"continue" or other words of similar meaning. You can also identify them by the
fact that they do not relate strictly to historical or current facts. Our actual
results and the actual outcome of our expectations and strategies could be
materially different from those anticipated or estimated for the reasons
discussed below and the reasons under the heading "Information Regarding Forward
Looking Statements."

We operate a general commercial banking business, attracting deposit customers
from the general public and using such funds, together with other borrowed
funds, to make loans, with an emphasis currently on residential mortgage
lending. Our results of operations are primarily determined by the difference
between the interest income and fees earned on loans, investments and other
interest-earning assets and the interest expense paid on deposits and other
interest-bearing liabilities. The difference between the average yield earned on
interest-earning assets and the average cost of interest-bearing liabilities is
known as net interest-rate spread. Our principal expense generally is the
interest we pay on deposits and other borrowings. The difference between
interest income on interest-earning assets and interest expense on
interest-bearing liabilities is referred to as net interest income. Net
interest income is significantly affected by general economic conditions and by
policies of state and federal regulatory authorities and the monetary policies
of the Board of Governors of the Federal Reserve (the "Federal Reserve"). Our
net income is also affected by the level of our non-interest income, including
loan-related fees, deposit-based fees, rental income, operations of our service
corporation subsidiary, gain on sale of real estate acquired in settlement of
loans, gain on the sale of investment securities and gain on sale of loans, as
well as our non-interest and tax expenses.

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 (the "Dodd-Frank Act") banks have been permitted to pay interest on demand
deposit accounts, including those from businesses, since July 21, 2011. While
we have not yet experienced any impact from this provision on our operations, if
our competitors were to start paying interest on these accounts it is possible
that our interest expense associated with deposits could increase, or that there
could be additional impacts on the Bank's allocation of deposits, deposit
pricing, loan pricing, net interest margin, ability to compete, ability to
establish and maintain customer relationships, and profitability.

During this continuing period of economic slowdown, the effects of which,
including declining real estate values resulting in asset impairment and
tightening liquidity, has particularly impacted the banking industry in general,
management continues to stress credit quality within both our loan and
investment portfolios. The Bank originates residential loans for its portfolio
and for sale in the secondary market. We had previously focused on diversifying
our loan portfolio by broadening our lending emphasis to include commercial real
estate and commercial and industrial loans. Recently, however, as demand for
these and other areas of lending have slowed, we again are focusing on
increasing our mortgage activity in order to reduce balance sheet risk as well
as to realize gains on the sale of loans in the secondary market. As a result,
our portfolios of commercial business, commercial real estate, and residential
land development loans to commercial borrowers have decreased. We also use
available funds to retain certain higher-yielding fixed rate residential
mortgage loans in our portfolio in order to improve interest income. Although we
intend to again focus on diversifying our loan portfolio when demand for these
other areas of loans picks up, we believe that our continued efforts to expand
our residential mortgage lending department are important to ensure future
profitability based on the current slow demand for commercial

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lending. Management believes that interest rates and general economic
conditions nationally and in our market area are most likely to have a
significant impact on our results of operations. We carefully evaluate all loan
applications in an attempt to minimize our credit risk exposure by obtaining a
thorough application with enhanced approval procedures; however, there is no
assurance that this process can reduce lending risks.

Both basic and diluted EPS amounts are shown on the Consolidated Statements of
Operations. However, "basic" earnings per share is utilized in this report's
narrative when per share amounts are listed, unless otherwise stated.

Recent Developments

Entry into a Material Definitive Agreement

On September 10, 2012, WSB and Old Line Bancshares, Inc., the parent company of
Old Line Bank, entered into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which Old Line Bancshares will acquire WSB for
consideration of approximately $48.7 million in stock and cash, or $6.09 per
share, subject to possible adjustment. The Merger Agreement, which has been
approved by the Boards of Directors of both companies, provides that WSB will be
merged with and into Old Line Bancshares (the "Merger"). The Bank will be
merged with and into Old Line Bank immediately following consummation of the
Merger.

Consummation of the Merger is subject to certain conditions, including, among
others, the approval of the Merger Agreement by the stockholders of Old Line
Bancshares and WSB and the receipt of required regulatory approvals. In
addition, a lawsuit has been filed against WSB and its directors and against Old
Line Bancshares that seeks to enjoin the Merger. Please see "Part I. Legal
Proceedings" in Part II of this report.

Please refer to our Current Report on Form 8-K filed September 11, 2012 for
further information and details relating to the Merger Agreement. Please refer
to our Current Report on Form 8-K filed October 26, 2012 for further information
relating to the lawsuit.

Regulatory Developments

On June 3, 2011, WSB and the Bank each entered into separate Supervisory
Agreements (the "Agreements") with the Office of Thrift Supervision (the "OTS"),
their primary banking regulator on such date. Pursuant to regulatory changes
instituted by the Dodd-Frank Act, WSB is now regulated by the Federal Reserve
and the Bank is now regulated by the Office of the Comptroller of the Currency
(the "OCC").

The Agreements, which are formal enforcement actions initiated by the OTS,
require WSB and the Bank to take certain measures to improve their safety and
soundness and maintain ongoing compliance with applicable laws. During the
course of a routine review at the Bank by the OTS, examiners identified certain
supervisory issues, primarily related to our classified assets. The Agreements
formalized the current understandings of both the Company and the OTS and the
Federal Reserve of the actions that WSB, the Bank and their Boards of Directors
must undertake to address the issues identified therein. Each Agreement will
remain in effect until terminated, modified or suspended by the Federal Reserve
or OCC, as applicable.

We have adopted many of the requirements required by the Supervisory Agreements
and have submitted the information to the appropriate regulators for their
approval.

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For additional information regarding the Agreements, please see WSB's Current
Report on Form 8-K filed with the Securities and Exchange Commission on June 6,
2011. The Agreements are filed as Exhibits 10.12 and 10.13 to our quarterly
report for the period ending June 30, 2011.

Critical Accounting Policies

Our financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America ("GAAP"). The preparation of
consolidated financial statements requires management to make judgments in the
application of certain of its accounting policies that involve significant
estimates and assumptions about the effect of matters that are inherently
uncertain. These estimates and assumptions are based on information available
as of the date of the financial statements, and may materially impact the
reported amounts of certain assets, liabilities, revenues and expenses as the
information changes over time. Accordingly, different amounts could be reported
as a result of the use of revised estimates and assumptions in the application
of these accounting policies.

Accounting policies considered relatively more critical due to either the
subjectivity involved in the estimate and/or the potential impact that changes
in the estimates can have on the reported financial results include the
accounting for the allowance for loan losses. Information concerning this
policy is included in the "Critical Accounting Policies" section of Management's
Discussion and Analysis in our Form 10-K for the year ended December 31, 2011
("2011 Form 10-K"). There were no significant changes in this accounting policy
during the nine months ending September 30, 2012.

Consolidated Results of Operations

Net loss for the three months ended September 30, 2012 was $4,000, or $0.00 per
basic and diluted share, compared to net income of $410,000 or $0.05 per basic
share and diluted share for the same three month period last year. Net earnings
for the nine months ended September 30, 2012 was $448,000, or $0.06 per basic
and diluted share, compared to net earnings of $966,000, or $0.12 per basic and
diluted share for the corresponding 2011 period. Net income for the three and
nine month periods ended September 30, 2012, represent decreases $414,000, or
101%, and $518,000, or 54%, respectively, over the same periods last year.

The decrease in net earnings for the three month period is primarily the result
of a $462,000 decrease in net interest income, a $232,000 decrease in
non-interest income and an increase of $211,000 in non-interest expenses as
compared to the same three month period last year. The decrease in net interest
income is primarily the result of the reduction of our loan portfolio classified
as held for investment due to loan payoffs. The primary reason for the decrease
in non-interest income during the three month period is a decrease in the gain
on sale of investment securities available for sale. The increase in
non-interest expense for the three month period is primarily the result of
increases of $97,000 in the provision for losses on real estate acquired in
settlement of loans, $86,000 in salaries and benefits and $61,000 in
professional fees. The decrease in net earnings for the nine month period is
primarily the result of a $901,000 decrease in net interest income and a
$288,000 decrease in non-interest income, partially offset by a decrease of
$107,000 in non-interest expenses. The decrease in net interest income is
primarily the result of the reduction of our loan portfolio classified as held
for investment due to loan payoffs that occurred during the nine month period
ending September 30, 2012 as well as a decrease in the yield on the portfolio.
The decrease in non-interest income is the result of a loss on the sale of
investment securities for the period ending September 30, 2012 as compared to a
gain on the sale of investments for the same nine month period last year,
partially offset by increases in most other components of non-interest income.
The decrease in non-interest expenses is primarily the result of decreases in
FDIC premiums and salaries and benefits. As we continue to experience low loan
demand there has been a decrease in our total loans held-for-investments
portfolio which has contributed to our interest income decreasing by 15% and
10%, respectively, for the three and nine months ended September 30, 2012. Also,
during the nine month period ending September 30, 2012, interest

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income decreased as a result of a decrease in both the balance and yield in our
loan portfolio classified as held for sale, offsetting the decrease in interest
expense, primarily as a result of the continued efforts to reduce our higher
cost liabilities, offsetting the decrease in interest expense.

Interest Income/Expense

Total interest income decreased $753,000, or 16.4%, and $1.8 million, or 13.3%,
respectively, for the three and nine month periods ending September 30, 2012,
compared to the corresponding periods last year, due primarily to a decrease in
both the average volume and average yield on interest-earning assets.

The nine month average balance of interest-earning assets decreased to $338.5
million for the nine months ending September 30, 2012 from $361.6 million for
the nine months ending September 30, 2011, due primarily to a decrease in loans
held for investment and investment securities, offsetting an increase in MBS.
The decrease in loans held-for-investment is primarily the result principal
paydowns. The decrease in investment securities is the result of approximately
$33.5 million called agency securities, the sale of a $2.5 million agency
security and the sale of $5.0 million of corporate bonds offset by $10.0 million
in purchases of callable agencies. The increase in MBS is the result of
purchases of MBS, partially offset by the sale of other MBS. The short-term
investment securities that were called and sold during the nine month period
were reinvested in mortgage-backed securities to increase the yield spread. In
accordance with the Merger Agreement, WSB is repositioning a portion of its
investment portfolio by selling existing securities that may result in an
adjustment to the total consideration to be paid in the Merger, based on
adjustments relating to the value of our investment portfolio as set forth in
the Merger Agreement, if such securities remain in our portfolio, as well as
purchasing new securities with Old Line Bancshares' consent. We expect to
continue to reposition the investment portfolio in order to attempt to minimize
any potential adjustment to the total consideration paid to WSB's stockholders
upon closing of the Merger.

The average yield on our interest-earning assets decreased to 4.74% during the
nine months ended September 30, 2012 from 5.12% during the same period in 2011.
The decrease is primarily the result of lower interest rates on interest
earnings assets including our loans held for investment, MBS and investment
securities compared to the same period last year due to a lower interest rate
environment. In addition, our troubled debt restructured loans increased by
approximately $6.9 million from September 30, 2011 to September 30 2012, and
such loans had significantly lower interest rates after such restructuring,
which also negatively impacted the yield on our interest-earning assets in the
2012 period.

Total interest expense decreased $291,000, or 20.2%, and $938,000, or 20.4%,
respectively, for the three and nine month periods ended September 30, 2012,
compared to the same periods in the prior year. The decrease was attributable
to a decrease in both the average balance, resulting primarily from the
maturities of approximately $5.0 million in our brokered certificate of deposits
since September 30, 2011, and the average interest rate on our interest-bearing
liabilities. For the nine month period ended September 30, 2012, our average
interest-bearing liabilities were $307.6 million with an average rate of 1.59%,
compared to $333.6 million with an average rate of 1.85% for the corresponding
period last year.

Net interest income decreased $462,000, or 14.6%, and $901,000, or 9.7%,
respectively, for the three and nine month periods ended September 30, 2012,
compared to the same periods in the prior year. Due to a lower average yield on
our interest earning assets and a lower average yield on our cost of
interest-bearing liabilities, our net interest rate spread decreased to 3.15%
for the nine month period ended September 30, 2012 from 3.27% for the same
period in the prior year. The ratio of our interest-earning assets to
interest-bearing liabilities increased to 110.04% at September 30, 2012 from
108.41% at September 30, 2011.

We continue to experience pressure on the compression of our interest rate
margins due to slowing demand for loans and lower yields on loan originations
and investment security offerings, however, the effects of this have

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been minimized by our ability to decrease interest rate expense through lower
deposit costs. This lower interest rate environment for loans and investment
securities compresses the interest rate spread by reducing interest income.
Interest rate margins may be further enhanced when and if economic conditions
begin to become more favorable to lending and funds currently held in investment
securities can be redirected back into the loan portfolio.

Allowance for Loan Losses

Our loan portfolio is subject to varying degrees of credit risk. Credit risk is
mitigated through portfolio diversification and limiting exposure to any single
customer or industry. We maintain an allowance for loan losses (the
"allowance") to absorb losses inherent in the loan portfolio. The allowance is
based on careful, continuous review and evaluation of the loan portfolio, along
with ongoing, quarterly assessments of the probable losses inherent in that
portfolio. The methodology for assessing the appropriateness of the allowance
includes: (1) a formula allowance reflecting historical losses by credit
category; (2) the specific allowance for risk rated credits on an individual or
portfolio basis; and (3) a nonspecific allowance which accounts for risks not
reflected by the other two components of the methodology. The amount of the
allowance is reviewed monthly by our Loan Committee, and reviewed and approved
monthly by the Board of Directors.

The allowance is increased by provisions for loan losses, which are an expense.
Charge-offs of loan amounts determined by management to be uncollectible or
impaired decrease the allowance, while recoveries of loans previously
charged-off are added back to the allowance. We make provisions for loan losses
in amounts necessary to maintain the allowance at an appropriate level, as
established by use of the allowance methodology.

Under the methodology, we consider trends in credit risk against broad
categories of homogenous loans, as well as a loan by loan review of loans
criticized or classified by management. Classified loans exceeding $300,000 are
individually evaluated quarterly as part of the calculation of the adequacy of
the allowance.

The allowance for loans losses is very subjective in nature, relying
significantly on historical loss experience, collateral valuations available to
management on specific loans, and economic conditions. The challenges caused by
the recent recession and continuing high unemployment levels and uncertain real
estate valuations have resulted in the Bank currently applying a loss history
look back period for the allowance for loan losses of 12 months, which is
shorter than the period the Bank had used historically. We continue to be
mindful of the continued problems within the economy and its impact on our loan
portfolio as well as the inherent risk within the portfolio, and management will
make adjustments to the allowance and loan loss provision as necessary. Based
on our review, no provision was necessary for either the three or nine month
periods ending September 30, 2012.

During the nine months ended September 30, 2012, the allowance decreased by $2.8
million or 45.3%, to $3.4 million at September 30, 2012 from $6.1 million at
December 31, 2011, as a result of net charge-offs of approximately $2.8 million
during the nine months ending September 30, 2012. At September 30, 2012, the
allowance was 1.79% of total loans held-for-investment, compared to 2.90% of
total loans held-for-investment at December 31, 2011.

The change in the allowance was primarily due to the fact that the risk profile
of our loan portfolio has improved as well as the reduction of our loan
portfolio balance classified as held-for-investment, particularly our commercial
secured by real estate loans. However, $2.6 million in charge-offs were related
to eliminating the specific reserve on our collateral dependent loans in 2012
based on OCC guidance newly applicable to us compared to the specific reserve
balances that existed at December 31, 2011.

Our determination of the adequacy of the allowance requires significant
judgment, and estimates of probable losses inherent in the loans
held-for-investment portfolio can vary significantly from the amounts actually
observed. See Critical Accounting Policies in the 2011 Form 10-K. While we use
available information to

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recognize probable losses, future additions to the allowance may be necessary
based on changes in the credits comprising the portfolios, changes in the
financial condition of borrowers, such as may result from changes in economic
conditions, or other considerations determined by management to be appropriate.

In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the loan portfolio and the allowance.
Such review may result in additional provisions based upon their judgments of
information available at the time of each examination.

We experienced an increase in charge-offs in our loan portfolio during the nine
month period ending September 30, 2012 compared to the same period last year.
During the nine months ending September 30, 2012 we recorded loan charge-offs of
$2.8 million and recoveries of previous charged-off loans of approximately
$61,000 compared to net charge-offs of $2.7 million for the corresponding nine
month period last year.

Assets subject to our Loan Committee review include loans which meet our
criteria for classification as sub-standard due to collateral deficiencies that
may reflect inherent losses. Based on the review of the individual loans
involved, management estimates inherent losses. We continue to assess the
allowance as new and relevant data is obtained.

We believe that the allowance reflects our best estimate of the probable
inherent losses existing in our $186.8 million (net of deferred loan fees)
loans-held for investment portfolio as of September 30, 2012. The $10.7 million
loan held-for-sale portfolio has been committed to be purchased by investors at
September 30, 2012 and will be settled subsequent to that date.

We have developed a comprehensive review process to monitor the adequacy of the
allowance. The review process and guidelines were developed utilizing guidance
from federal banking regulatory agencies and relies on relevant observable
data. The observable data considered in the determination of the allowance is
modified as more relevant data becomes available. The results of this review
process support management's view that the allowance reflects probable losses
within the loan portfolio as of September 30, 2012.

Changes in the estimation valuations may take place based on the status of the
economy and the estimate of the value of the property securing loans, and as a
result, the allowance may increase or decrease. Future adjustments could
substantially affect the amount of the allowance.

We believe our evaluation as to the adequacy of the allowance as of
September 30, 2012 is appropriate, and caution the reader that the provisioning
for the nine month period is not necessarily indicative of future provisioning.
Subjective judgment is significant in the determination of the provision and
allowance, manifested in the valuation of collateral, a borrower's prospects of
repayment, and in establishing allowance factors and components for the formula
allowance for homogeneous loans. The establishment of allowance factors is a
continuing exercise, based on management's assessment of the factors and their
impact on the portfolio, and that allowance factors may change from period to
period, resulting in an increase or decrease in the amount of the provision or
allowance, based upon the same volume and classification of loans. A time lag
between the recognition of loss exposure in the evaluation of the adequacy of
the allowance and a loan's ultimate resolution and/or charge-off is normal and
to be expected.

We review on a monthly basis the adequacy of the allowance, and make provisions
accordingly to meet the deemed losses within the portfolio. Based on this
review, as noted above, no provision was deemed necessary for the three and nine
month periods ending September 30, 2012. For a better understanding and a more
complete description of the allowance and the evaluation process, refer to the
2011 Form 10-K.

The following table shows charge-offs and recoveries in the allowance during the
three and nine month periods ending September 30, 2012 and 2011. In addition, we
believe there are additional, unidentified, probable

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losses within the portfolio, which may be reflected as charge-offs against the
allowance in future quarters as these losses manifest themselves and loan
collection efforts continue.